The cost of energy independence

It was in the 1970’s that an Arab oil embargo led to skyrocketing fuel prices and long lines at the pump across the United States.

And since Richard Nixon, one US president after another, has invoked images like these as they vowed to reduce American dependence on foreign oil.  Some promised complete independence during their tenure – they all failed.

But in a recent report, the International Energy Agency (IEA), said that the US could finally achieve energy independence in the next few decades. It also said that it would overtake the world’s largest oil producer, Saudi Arabia, by around the year 2020.

“The really interesting thing is not so much the actual prediction but the people who made it, the IEA is kind of seen as certainly if not the gold standard, [but] certainly right up there in terms of folks who look at the energy world. They are frequently cited as almost the quasi official statistics so from that perspective, it is sort of a breakthrough or a landmark but I think the things they are saying are not that different than what a lot of other analysts have been saying for quite some time.” – Jeremy Carl, an energy policy expert

This is partly due to the recent boom in the production of natural gas, which is extracted by a method known as hydraulic fracturing or fracking.

Critics of this technique say its destructive to the environment and to the health of those who live near where it is taking place.

In fact the IEA warned that governments must address concerns surrounding the impact of natural gas extraction by establishing a robust regulatory framework.
 
China says it will cut 16 per cent of its energy consumption by 2015. And the US recently adopted measures that would require automakers to nearly double the average fuel economy standards for new cars and trucks by 2025.

Meanwhile, the European Union has agreed to cut its energy consumption by 20 per cent by the year 2020. And Japan is aiming to cut its electricity consumption by 10 per cent in the next twenty years.

But again, the report said these measures are not enough to improve global energy efficiency. It warned the goal world leaders committed to three years ago in Copenhagen to limit global warming to two degrees Celsius will be nearly impossible unless governments do more to limit carbon emmissions.

In its report, the IEA also warned the world is still failing to put in place a more sustainable path, despite some of the measures that have been put in place.

So what price is the US willing to pay to achieve energy independence?  

To discuss this, Inside Story Americas, with presenter Kimberly Halkett, is joined by guests: Susan Phillips, an award-winning producer of a series on Pennsylvania’s natural gas rush called The Shale Game; Jeremy Carl, a research fellow at the Hoover Institution; and Steve Kretzman, founder of Oil Change International.

“It’s a possibility, the US could export a lot more, that we are finding a lot more oil in the United States today. The question is: At what cost do we do that? And so on one hand people talk about energy independence but oil is a global market and so there is no way even if the US did produce all the oil that we use, we’d still be vulnerable to price shocks that are happening in the Mid East or anywhere else around the world. And secondarily again, climate change is a game changer … we really have to face the fact that we cannot burn all the fossil fuels that we can find in the ground … and not suffer the consequences.” Steve Kretzman, founder of Oil Change International

 

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FACTS ABOUT ENERGY INDEPENDENCE AND FRACKING

• IEA predicts the US will produce 11.1m barrels of oil a day by 2020  
• Saudi Arabia expected to overtake the US again in the mid-2020s  
• The US will overtake Russia as biggest gas producer by 2015  
• Report: US will become ‘all but self-sufficient’ in energy by 2035  
• The US growth largely due to expansion of fracking 
• Fracking extracts oil from shale rock in the ground 
• Critics say fracking uses toxic chemicals that pose pollution risk  
• The process uses vast amounts of water  
• It damages landscapes and can pollute soil, according to critics  
• Fracking has been linked to instances of minor earthquakes